India: Portside Indonesian thermal coal prices weaken amid falling import prices

Portside prices of mid-low-CV Indonesian thermal coal weakened this week in line with the fall in imported prices of the same.

The record coal output in China, and a sharp decline in inquires by power utilities in the country have put pressure on prices of Indonesian coal (ranging from GAR 3600 kcal/kg to 5000 GAR). On the other hand, prices of high CV (GAR 5800-6500 kcal/kg) have inched up.

Several Indian coal-consuming units are the largest buyers of these low-CV grades (3600-5000 kcal/kg), while renewed sanctions on Russia have compelled European and Japanese buyers to procure high-CV Indonesian coal.

As per CoalMint assessment, prices of GAR 4200 kcal/kg are in the range of INR 9,800-10,000/t, down by INR 500/t w-o-w at Kandla, while those of GAR 5000 kcal/kg are at INR 12,000/t. Prices exclude cess and GST.

Buyers cautious

Indian buyers continued to limit their procurement to smaller parcels amid the expectation of prices softening further. However, trading activity gained the pace ever since the tension surrounding the Russia-Ukraine crisis had lifted coal prices sharply higher.

With rising vessel arrival from Indonesia, thermal coal stock at Kandla Port also increased to 1.5 mnt during 10-14 April 2022, up by 21% w-o-w. Stock at Navlakhi Port rose slightly by 4% w-o-w to 1.4 mnt, CoalMint stock report reveals.

Coal stock of Swiss Singapore rose sharply by 99% w-o-w to 0.29 mnt at Kandla Port, while that of Adani Enterprise’s rose by 19% w-o-w to 0.66 mnt at Navlakhi Port, data showed.

“Given the global uncertainty and tight output in Indonesia this year, buyers are currently focusing at securing their import supplies”, a Surat-based importer said.

Heavy rains affect coal output in Indonesia

Tight supply conditions surrounding heavy rainfall in mines continued to weigh on coal production in Indonesia.

Meanwhile, with low coal stock with state-power utility PLN, the Indonesian government also announced to establish a “special entity” by June to help secure supplies and collect levies.

Short-term outlook

Indonesian low-CV prices are likely to remain under pressure amid rising coal output in China. Demand for high CV coal is likely to continue rising amid Europe’s strong buying appetite as the country is trying to secure supplies before its sanctions on Russia kick in from mid-August 2022.